About 43 lakh households have already had a first hand experience of the net. These represent three fourth of the 5.7 million socio-economic class A and B households in the top 16 cities of the country a group that can be referred to as relevant population for the Internet. Of these 12 lakh have used the net in the last three months i.e. regular users of the net. 1.26 lakh have a connection at home, which is nearly one fourth of the base of PC owning households. Hence "ten times" the number of connections use regularly and "Thiry four" times the number of connections have 'experienced' usage! Clearly 'usage' or 'experience' has not been constrained by existing connections or available hardware to access connections (PCs). 97% have used 'out of home', largely at school/college or at work, or, at a cyber cafe.
What has this resulted in ? A very high interest level and desire to acquire as is evident from these statistics.
- Home PC market growing at about 70%
- 27% the relevant population i.e. 1.6 million intend to acquire a PC
- 16% or 0.9 million intent to acquire an internet connection
- The home connection base of internet is expected to reach 3 lakhs and of PCs 7.5 lakhs by March 2000
Clearly a multi-pronged approach is required from hardware vendors, content creators, ISPs and other internet businesses focussing on the home market. Three issues have been identified by the IMRB research team for focus.
Increase utility of the internet
The internet is still viewed as a tool for entertainment and communication, quite like what the PC is believed to achieve. The e-commerce potential is lesser known though the possibility of two-way communication over the net is recognised. Already, 38% of the PC owners and 23% of the PC non-owners belonging to the relevant segment are willing to buy over the net. Marketers need to focus on the more easily acceptable products and services that consumers would be willing to purchase off the net. The research study has shown that potential buyers are most comfortable with cinema tickets, greeting cards, clothes, cassettes, books, magazines, fast food & medicines. Interestingly about 20% of the consumers are willing to evaluate products such as kitchenware, Audio systems, TV, refrigerators and similar durables from the net. The potential is huge provided the appropriate content is created and placed. The research team has estimated an e-commerce potential of uptoRs.168 billion at reasonably conservative estimates!
Issue 2 : Re-invent PC marketing
Only 19% of the PC owners have bought the PC primarily for the internet. In terms of hierarchy of purchase the PC is viewed as the 12th in importance after other durables such as car and A/C. The world over is witnessing innovative marketing models with lower box prices, financing option, bundling with the net and even free PCs for internet access. Vendors and marketers in India have to literally redefine the current positioning of a PC if they have to achieve substantially higher penetration rates among hoseholds that translate into higher internet penetration.
Issue 3 : Search for a new access method
The conventional route of internet thru' PC and over the phone line suffers from limitations in both telephone and PC penetration. In the relevant target audience PC penetration is only 8% and even telephones is only 49%. TV and Cable have been identified by the research team as the solution to mass adoption, as well as to overcome the limitation in access posed by the telephone line as well as the additional costs of telephone usage time. Cable, in a short span has achieved 77% penetration across the relevant audience and even among lower socio-economic groups. TV penetration among the relevant audience is close to 100%!. Demand forecasts made by the research team based on various price points for access of internet over cable, and the resultant investment in cable modem sit-top boxes, point towards nearly doubling the potential offered through conventional telephone-PC access. There are indeed certain technology constraints that need to be overcome. Firstly two way networks are necessary while most cable operators have single networks in place. The costs of set-top boxes and modems need to be made attractive which would be possible only if the current business model in vogue among cable operators undergoes a dramatic shift, with consolidations and synergies that result in viable business entities which can make appropriate investments in technology.
Cyber cafes - bridging the access gap
Inadequate penetration of PCs and internet in homes, as well as limitations in access from place of work have resulted in the emergence of cybercafes. Free e-mail accounts have facilitated the development of this quick and low-cost communication channel with the access limitation met be the cyber cafes. The research study ahs ascertained a mushroom growth in cyber cafes with the estimated number in the top eight cities touching 2000. Infested by students and young executives the cyber cafes are rapidly gaining in popularity with certain states like Delhi encouraging mass conversion of STD booths into internet cyber cafes, with attractive financing options.
